When bots attack

The robots are attacking Wall Street’s integrity.

A technical meltdown at trading giant Knight Capital yesterday — which may take a $300 million to $500 million bite out of its balance sheet — resulted in a wave of erroneous orders in shares of nearly 150 companies.

But more important, the glitches, which started just after the market’s opening, could continue to erode Main Street’s confidence in the equity markets.

Consider:

* On May 18, the initial public offering of Facebook was totally botched by Nasdaq computer glitches, causing a nearly 90-minute delay in the debut of the much-hyped social network darling.

* On March 23, a faulty program upends the debut of electronic trading platform BATS. It was its own exchange that went batty. It also disrupted trading in other stocks, including Apple.

Perhaps the biggest blow to investor confidence came on May 6, 2010, when a computer-driven flash crash whipsawed the Dow Jones industrial average by roughly 1,000 points.

“This is not an event that you draw a lot of confidence from,” said Justin Schack, managing director at Rosenblatt Securities.

To be sure, the 2008 credit crisis and the European fiscal worries aren’t exactly cheering spirits either, Schack notes.

But yesterday’s wild trading certainly didn’t help.

“Between the regulatory problems and the technical problems the stock market is having, the industry certainly isn’t putting its best foot forward,” noted Larry Tabb ,CEO and founder of the Tabb Group.

Knight Capital’s meltdown caused wild trading to occur almost as soon as the markets opened at 9:30 a.m., and lasted until about 10:15 a.m., according to traders.

At one point, Knight Capital, which functions as market maker and a facilitator of trades for other firms, was turning orders away and telling clients to go elsewhere.

The wild market action leaves egg on the face of Knight Capital CEO Tom Joyce, whose firm lost some $35.4 million on Facebook’s botched IPO. Joyce was one of Nasdaq’s most vocal critics.

“The company continues to review internally,” a Knight Capital spokeswoman said.

Hundreds of stocks including household names like Citigroup, Caterpillar and Berkshire Hathaway’s Class B shares as well as the shares of lesser-known companies experienced out-of-whack orders.

The New York Stock Exchange had to contact Knight Capital to inform it of the erratic trades, sources told The Post.

Traders on the Street started to notice the unusual activity when orders of typically thinly-traded stocks started to balloon.

Dozens of small companies that typically see modest trading volume in the hundreds of thousands of shares per day rocketed to millions of shares within minutes.

The NYSE later said it would cancel trades in six thinly traded issues that were 30 percent higher or lower than the opening prices.